The price of brent crude oil could jump as high as $150 (£96) per barrel if the escalating conflict in Syria results in disruptions to supply, a report from Societe Generale has said.
The price of brent crude rose as much as 2.5 per cent to $117.23 per barrel on the ICE Futures Europe exchange – the highest seen since 25 February.
This comes amid allegations that Syrian president Bashar al-Assad’s used chemical weapons against his people - an act that UK prime minister David Cameron has branded "morally indefensible". He plans to hold a meeting with the UK National Security Council and the UN Security Council today to discuss a coordinated attack with the US and France, and to debate with MPs in parliament tomorrow the UK’s response to the Syrian crisis.
The Washington Post reported late last night that the White House plans to publicly release evidence as early as tomorrow detailing how the Syrian regime used chemical weapons, and that a US-led military strike could be seen within days.
Michael Wittner, head of oil market research at Societe Generale, said in an emailed report this morning that brent crude could start trading as high as $125 per barrel in the coming days in anticipation or event of a strike, and may “spike briefly” to $150 per barrel if an attack disrupts supply from Iraq and other Middle Eastern producers.
The concern is that an attack on Syria will reverberate through the region, increasing the spillover into other countries and possibly resulting in a larger supply disruption elsewhere. Our big worry is Iraq.
A potential loss of 500,000 barrels to two million barrels per day of production could be met by spare capacity in Saudi Arabia, the report said.